'Talking about curtailment will soon be a distant memory'

The expected growth in battery storage and electric vehicles, and the rise of demand response and the Internet of Things, raises a lot of questions about how this new electricity world would function and what role consumers, utilities and grids will play.

Leigh Collins talks to one of the world’s leading experts on this subject — Steven Martin, chief digital officer at GE Energy Connections — and finds some surprising answers.

A lot of people say that demand response and the Internet of Things will be vital to help balance the grid in the near future — but when will the technology be ready?

The technology is not complicated and has actually been available for a while. The reality is there aren’t too many consumers that are readily willing to engage in various levels of curtailment.

But I actually think we’re going to get through this wave pretty quickly and the days of actually talking about curtailment and optimisation or peak shaving or demand response and such things, is actually going to be a distant memory in most markets.

Why do you say that?

Due to the reality that we’re going to have an abundance of solar energy during the day. I think rather than curtailment and the demand-response scenarios, we’re going to be focusing our energy on what do we do with the excess [energy], rather than what do we do in cases where we want to shave a peak. I think very quickly, we’re going to be telling pool pumps to turn on just because there’s no reason not to. You can just go ahead and run because the effective cost of energy at particular moments is free.

What timescales are you talking about here?

Three to five years.

Do you think renewables are being built fast enough for that to happen?

Yes, given the fact that the per-capita consumption of energy is flat to down in the developed world and the only way that you’re actually getting total growth by and large is by new entrants. So on a per-capita basis, if you’re flat to down and you’re seeing a significant increase in the amount of rooftop solar or renewables, whether it’s wind or utility-scale or otherwise, by definition it’s going to have an impact.

So do you think this will be driven by distributed solar?

Distributed solar will certainly have a huge impact on it.

And storage?

Storage I think is really big. I think the question on the storage side is, at what point is it cost-effective? And certainly in some locations where renewable penetration is already very high, storage is already there, and it is cost-effective.

But in a world where you have excess renewable energy, you want a lot of storage, don’t you?

True, but in places where you get nuclear as a high level of your baseload, storage is not necessarily of particular interest until it comes way down in cost. So it really depends what the make-up is. But I think everybody agrees that at some price point, storage actually is really, really interesting. For some, that’s today; others might say it needs to come down by 80% before it’s relevant for them.

So do you think the price of storage is going to come down fast enough to remove the need for peak shaving and that sort of thing?

Absolutely. There’s no doubt in my mind.

A similar cost curve to solar?

Yeah, a similar cost curve to solar. In fact, I think you could argue, given all of the pressure that’s been put into the lithium-ion market on the back of EVs, you might see traction faster than in the solar panel space.

Let’s go back to demand response. Are people are going to need some kind of control system in their homes? Is that going to be internet-based, will you need a new fusebox that’s able to switch things on and off, or will you need super-smart meters? How is it going to play out? How is large-scale adoption going to happen?

Certainly from my perspective, [If it was up to me] it would be network-based hardware that gets its instructions and its models, if you will, on how to operate. That doesn’t necessarily mean that it needs to be ubiquitously connected. You’d get a model running locally that I think would be network-connected.

"The real issue is, I don’t think there’s too many consumers willing to take a negative change without getting something for it"

What hardware would be needed, what does a control system for demand response look like?

Hopefully, it’s largely software based, and the software could sit in a variety of places. In an ideal state, it’s cloud-based and it’s administered by the utility.

The real issue is, I don’t think there’s too many consumers willing to take a negative change without getting something for it, so I would think the model going forward needs to be, in exchange for 15% off your bill, you let us take control, to some level, of your smart home devices — where the consumer still has the ability to override when they want.

So when do you think people will start doing this on a scale to make a difference?

The thing we’ve got going against us right now is that in most markets the price of energy is so low that it’s actually hard to think about.

I don’t think people in the UK would say that.

Yeah, globally it’s true, but in Germany and the UK, certainly that’s less true. But in markets where it’s high you’ll probably see demand response first.

So who’s going to market this, who’s going to provide the software? Utilities?

Utilities, by and large.

Have you been speaking to utilities about this?

Absolutely.

Is this something they want to do?

It is. We’ve got a pilot with an organisation based in the UK on this right now, that you’ll hear more about in October.

So will everyone need the same software?

I think if we do our jobs right, you won’t even know that it’s necessarily there. What you’ll do is to decide the opt in/opt out and the extent to which you opt in and opt out.

So a utility will have a website maybe where the customer has to click certain boxes and then it just happens?

Right. And then you might have two tiers. You might say, for 25% [discount] the utility absolutely gets to control that device, for 15% you can override me any time you want.

So this is basically banks of servers sitting somewhere sorting it all out and the consumer doesn’t even think about it.

Yup. And I think that’s the ideal.

But they can override it if they need their washing done quickly.

Absolutely.

Do you think people will have their own batteries in their own homes? Or do you think they might be in the local substation or centralised? Or in their cars?

The thing I know for sure is that we’re going to have batteries. Where they’re going to exist, whether it’s going to be completely distributed out of the home, or they’re going to be more centralised in substations is very much TBD [to be determined]. The behavioural economist in me will tell you that we’re going to get best scale if we do it at utility-scale, rather than everyone having their own.

Laszlo Varro, the chief economist of the IEA, recently told me that we’re going to have ten times the batteries we need because every car will have one.

I agree with the premise that they will absolutely be there — whether or not they’re going to be leveraged day in, day out, is less clear to me. As an electric car driver myself, I would certainly love the opportunity, if the power was out, to power my home as a short-term thing, that would make a ton of sense.

But if you can get money for essentially doing nothing because your car is charging all day, you’ve driven to work and you’ve plugged it in, and someone somewhere needs a bit of power and they give you money for it.

Energy Transition: Big ambition needed in an era of big change

Sure, there’s not a lot of downside for me in that, or doing the same thing at night. The problem is the scenario at home at night is not the place where the grid generally [needs help with balancing].

No, but you will have a problem of a thousand cars in one neighbourhood suddenly plugging in at the same time.

Sure, and then you want to stagger the charge and you need to be smart about how you manage that. There’s a variety of ways to do that. You don’t necessarily have to stagger it, but you could in that scenario use a smart meter or a smart device on the end to regulate how much energy you’re flowing at any one particular point in time.

Could you programme it to say, ‘I’m not going to use my car until this time’ and some system can say ‘we’ll give you a bit less electricity at this hour, and a bit more at that hour, and you’ll still get the same amount but we’re managing it so we can balance everything’.

Absolutely, and again the economist in me is going to say the best way to do something like that is to tell the consumer, ‘I will charge your car for 60% of the cost if we can do a managed plan on charging it over a larger number of hours’. As long as it’s done by six o’clock in the morning, do you really care?

And you could do that during the day as well, when you plug in your car at work.

Sure.

Do you see vehicle-to-grid as a major part of the energy infrastructure going forward?

We’ll see. I’m not sure. The potential is definitely there, and it’s a fun thing to talk about.

What makes you think it might not happen?

Well, there’s three pieces you have to get right in that equation. There has to be value in it for the consumer, so the consumer has to opt in. The manufacturer of the car has to play along as well, because it’s their software that will govern the flow out of that battery. And there’s not a whole lot of economic value in it for them because it potentially degrades the value of their asset in a manner which is not additive to its original purpose — driving.

But if it’s beneficial to the consumer…

So, yes, in that sense there could be a pass-through, but the car manufacturer has to be persuaded. And then the utility has to be able to manage it as a programme in a way that makes sense. So can it happen? Sure. But I think there is some complexity here that I think we’re overlooking when we talk about it.

And there’s also things like, are we going to have one public standard on inflow and outflow from EVs, or is every vendor going to want their own proprietary mechanism for how they access that?

Well, I think you’re going to need some kind of USB port for electric cars.

I tend to agree. But even then, sending the command to charge or discharge, is that vehicle specific, or do we want to have common standards?

Are you having discussions with electric vehicle makers about this?

Digitalisation set to supercharge solar profitability: SPE

I’ve had a couple of those conversations. Right now, they tend to believe it’s proprietary.

Presumably EVs [electric vehicles] are something you’re planning in terms of grid management — there will be times when there’s a lot of demand on the grid. If you’ve got a million people suddenly plugging in their electric cars at the same time, when they get home from work, that’s a huge sudden demand on the grid.

Yeah, and potentially right at the time when we’re least equipped to deal with it — the head of the duck curve [ie, when solar power has stopped for the day and demand rises as people return home from work]

Is this something that people involved in grids are concerned about?

Not at the grid level because the percentage in total is still relatively small.

Yes, but it’s expected to grow exponentially.

Correct, but I think necessity being the mother of invention, this is certainly a solvable problem.

Will it involve upgrading a lot of grids and local grids?

Potentially. But I think the other way to look at it is not to overlook the behavioural or economic side of this equation too. I mean, one way you deal with this is by having very low-cost charging stations where people work or shop or go to the movies — to encourage a behaviour pattern where people aren’t charging at their homes.

Assuming you get the cost structure and infrastructure right, you can actually encourage people to operate in a completely different way than they would, so that the problem [of everyone plugging in] at home isn’t a big deal.

'Talking about curtailment will soon be a distant memory'

The expected growth in battery storage and electric vehicles, and the rise of demand response and the Internet of Things, raises a lot of questions about how this new electricity world would function and what role consumers, utilities and grids will play.

Leigh Collins talks to one of the world’s leading experts on this subject — Steven Martin, chief digital officer at GE Energy Connections — and finds some surprising answers.

A lot of people say that demand response and the Internet of Things will be vital to help balance the grid in the near future — but when will the technology be ready?

The technology is not complicated and has actually been available for a while. The reality is there aren’t too many consumers that are readily willing to engage in various levels of curtailment.

But I actually think we’re going to get through this wave pretty quickly and the days of actually talking about curtailment and optimisation or peak shaving or demand response and such things, is actually going to be a distant memory in most markets.

Why do you say that?

Due to the reality that we’re going to have an abundance of solar energy during the day. I think rather than curtailment and the demand-response scenarios, we’re going to be focusing our energy on what do we do with the excess [energy], rather than what do we do in cases where we want to shave a peak. I think very quickly, we’re going to be telling pool pumps to turn on just because there’s no reason not to. You can just go ahead and run because the effective cost of energy at particular moments is free.

What timescales are you talking about here?

Three to five years.

Do you think renewables are being built fast enough for that to happen?

Yes, given the fact that the per-capita consumption of energy is flat to down in the developed world and the only way that you’re actually getting total growth by and large is by new entrants. So on a per-capita basis, if you’re flat to down and you’re seeing a significant increase in the amount of rooftop solar or renewables, whether it’s wind or utility-scale or otherwise, by definition it’s going to have an impact.

So do you think this will be driven by distributed solar?

Distributed solar will certainly have a huge impact on it.

And storage?

Storage I think is really big. I think the question on the storage side is, at what point is it cost-effective? And certainly in some locations where renewable penetration is already very high, storage is already there, and it is cost-effective.

But in a world where you have excess renewable energy, you want a lot of storage, don’t you?

True, but in places where you get nuclear as a high level of your baseload, storage is not necessarily of particular interest until it comes way down in cost. So it really depends what the make-up is. But I think everybody agrees that at some price point, storage actually is really, really interesting. For some, that’s today; others might say it needs to come down by 80% before it’s relevant for them.

So do you think the price of storage is going to come down fast enough to remove the need for peak shaving and that sort of thing?

Absolutely. There’s no doubt in my mind.

A similar cost curve to solar?

Yeah, a similar cost curve to solar. In fact, I think you could argue, given all of the pressure that’s been put into the lithium-ion market on the back of EVs, you might see traction faster than in the solar panel space.

Let’s go back to demand response. Are people are going to need some kind of control system in their homes? Is that going to be internet-based, will you need a new fusebox that’s able to switch things on and off, or will you need super-smart meters? How is it going to play out? How is large-scale adoption going to happen?

Certainly from my perspective, [If it was up to me] it would be network-based hardware that gets its instructions and its models, if you will, on how to operate. That doesn’t necessarily mean that it needs to be ubiquitously connected. You’d get a model running locally that I think would be network-connected.

"The real issue is, I don’t think there’s too many consumers willing to take a negative change without getting something for it"

What hardware would be needed, what does a control system for demand response look like?

Hopefully, it’s largely software based, and the software could sit in a variety of places. In an ideal state, it’s cloud-based and it’s administered by the utility.

The real issue is, I don’t think there’s too many consumers willing to take a negative change without getting something for it, so I would think the model going forward needs to be, in exchange for 15% off your bill, you let us take control, to some level, of your smart home devices — where the consumer still has the ability to override when they want.

So when do you think people will start doing this on a scale to make a difference?

The thing we’ve got going against us right now is that in most markets the price of energy is so low that it’s actually hard to think about.

I don’t think people in the UK would say that.

Yeah, globally it’s true, but in Germany and the UK, certainly that’s less true. But in markets where it’s high you’ll probably see demand response first.

So who’s going to market this, who’s going to provide the software? Utilities?

Utilities, by and large.

Have you been speaking to utilities about this?

Absolutely.

Is this something they want to do?

It is. We’ve got a pilot with an organisation based in the UK on this right now, that you’ll hear more about in October.

So will everyone need the same software?

I think if we do our jobs right, you won’t even know that it’s necessarily there. What you’ll do is to decide the opt in/opt out and the extent to which you opt in and opt out.

So a utility will have a website maybe where the customer has to click certain boxes and then it just happens?

Right. And then you might have two tiers. You might say, for 25% [discount] the utility absolutely gets to control that device, for 15% you can override me any time you want.

So this is basically banks of servers sitting somewhere sorting it all out and the consumer doesn’t even think about it.

Yup. And I think that’s the ideal.

But they can override it if they need their washing done quickly.

Absolutely.

Do you think people will have their own batteries in their own homes? Or do you think they might be in the local substation or centralised? Or in their cars?

The thing I know for sure is that we’re going to have batteries. Where they’re going to exist, whether it’s going to be completely distributed out of the home, or they’re going to be more centralised in substations is very much TBD [to be determined]. The behavioural economist in me will tell you that we’re going to get best scale if we do it at utility-scale, rather than everyone having their own.

Laszlo Varro, the chief economist of the IEA, recently told me that we’re going to have ten times the batteries we need because every car will have one.

I agree with the premise that they will absolutely be there — whether or not they’re going to be leveraged day in, day out, is less clear to me. As an electric car driver myself, I would certainly love the opportunity, if the power was out, to power my home as a short-term thing, that would make a ton of sense.

But if you can get money for essentially doing nothing because your car is charging all day, you’ve driven to work and you’ve plugged it in, and someone somewhere needs a bit of power and they give you money for it.

Energy Transition: Big ambition needed in an era of big change

Sure, there’s not a lot of downside for me in that, or doing the same thing at night. The problem is the scenario at home at night is not the place where the grid generally [needs help with balancing].

No, but you will have a problem of a thousand cars in one neighbourhood suddenly plugging in at the same time.

Sure, and then you want to stagger the charge and you need to be smart about how you manage that. There’s a variety of ways to do that. You don’t necessarily have to stagger it, but you could in that scenario use a smart meter or a smart device on the end to regulate how much energy you’re flowing at any one particular point in time.

Could you programme it to say, ‘I’m not going to use my car until this time’ and some system can say ‘we’ll give you a bit less electricity at this hour, and a bit more at that hour, and you’ll still get the same amount but we’re managing it so we can balance everything’.

Absolutely, and again the economist in me is going to say the best way to do something like that is to tell the consumer, ‘I will charge your car for 60% of the cost if we can do a managed plan on charging it over a larger number of hours’. As long as it’s done by six o’clock in the morning, do you really care?

And you could do that during the day as well, when you plug in your car at work.

Sure.

Do you see vehicle-to-grid as a major part of the energy infrastructure going forward?

We’ll see. I’m not sure. The potential is definitely there, and it’s a fun thing to talk about.

What makes you think it might not happen?

Well, there’s three pieces you have to get right in that equation. There has to be value in it for the consumer, so the consumer has to opt in. The manufacturer of the car has to play along as well, because it’s their software that will govern the flow out of that battery. And there’s not a whole lot of economic value in it for them because it potentially degrades the value of their asset in a manner which is not additive to its original purpose — driving.

But if it’s beneficial to the consumer…

So, yes, in that sense there could be a pass-through, but the car manufacturer has to be persuaded. And then the utility has to be able to manage it as a programme in a way that makes sense. So can it happen? Sure. But I think there is some complexity here that I think we’re overlooking when we talk about it.

And there’s also things like, are we going to have one public standard on inflow and outflow from EVs, or is every vendor going to want their own proprietary mechanism for how they access that?

Well, I think you’re going to need some kind of USB port for electric cars.

I tend to agree. But even then, sending the command to charge or discharge, is that vehicle specific, or do we want to have common standards?

Are you having discussions with electric vehicle makers about this?

Digitalisation set to supercharge solar profitability: SPE

I’ve had a couple of those conversations. Right now, they tend to believe it’s proprietary.

Presumably EVs [electric vehicles] are something you’re planning in terms of grid management — there will be times when there’s a lot of demand on the grid. If you’ve got a million people suddenly plugging in their electric cars at the same time, when they get home from work, that’s a huge sudden demand on the grid.

Yeah, and potentially right at the time when we’re least equipped to deal with it — the head of the duck curve [ie, when solar power has stopped for the day and demand rises as people return home from work]

Is this something that people involved in grids are concerned about?

Not at the grid level because the percentage in total is still relatively small.

Yes, but it’s expected to grow exponentially.

Correct, but I think necessity being the mother of invention, this is certainly a solvable problem.

Will it involve upgrading a lot of grids and local grids?

Potentially. But I think the other way to look at it is not to overlook the behavioural or economic side of this equation too. I mean, one way you deal with this is by having very low-cost charging stations where people work or shop or go to the movies — to encourage a behaviour pattern where people aren’t charging at their homes.

Assuming you get the cost structure and infrastructure right, you can actually encourage people to operate in a completely different way than they would, so that the problem [of everyone plugging in] at home isn’t a big deal.